This watchdog blog, by journalist Norman Oder, offers analysis, commentary, and reportage about the $4.9B project to build the Barclays Center arena and 15-16 towers at a crucial site in Brooklyn. Dubbed Atlantic Yards by developer Forest City Ratner in 2003, it was rebranded Pacific Park Brooklyn in 2014 after the Chinese government-owned Greenland Group bought a 70% stake going forward. As of 2018, after the arena and four towers were built, Greenland will own 95% of future construction.

At conference call, Forest City won't comment on disposition pace, says future spending on Pacific Park modest; railyard due end of year

The news from yesterday's Forest City Realty Trust conference call with investment analysts, according to the Real Deal, was that discussions about a potential sale or strategic dispositions will remain “robust” but not necessarily “timely,” according to CEO David LaRue.

He had been asked by previous guidance that included the word "timely" had been dropped. The company's initial statement about a potential disposition came in September, and reports of two possible deals have been floated already.

So perhaps the lack of "timely" was a signal that reported (but not confirmed) talks with Brookfield and/or Equity Residential were hardly resolved. The board, LaRue said, "is running a robust and thorough process that is ongoing."

And in New York

LaRue was similarly tactful regarding Forest City's operations in New York, given its announcement that it was reducing from 30% to 5% ownership of future Pacific Park development.

"Again, we still have a very significant part of our portfolio in New York City, I think it's almost a third of our operating income," he said in response to a question of whether Forest City was pulling back in New York. "We have great assets. We have great opportunity in New York to continue to redevelop those existing assets. We had a very successful development at Cornell Tech. If an opportunity would present itself to advance another development opportunity, we would look at that."

That said, they had a development opportunity with Pacific Park, but decided not to risk it.

"We stated, as a company, over the past 24-plus months, 36 months, we understood we needed to get our development ratios down, and we've been working to do that," he said. "This helped us again on that goal. This is something that Forest City was strategically driven to." In other words, Forest City only wants to put money to risk on less risky projects.

How much to complete Pacific Park?

How much will Forest City have to spend to complete Pacific Park, they were asked.

Some "very minor" allotment is needed to finish the buildings already vertical, analysts were told, plus the obligation, under the previous 70%/30% ratio with Greenland, to finish the permanent railyard, which should be finished in the fourth quarter of this year. That means about $30 million of a $100 million project.

(Wait a sec--wasn't the permanent railyard supposed to be finished at the end of 2017? Given that the Metropolitan Transportation Authority's East Side Access plan is also delayed, the impact my not be crucial regarding Long Island Rail Road operations.)

CFO Bob O'Brien noted that the joint venture would get back an $86 million letter of credit it put up to ensure the yard's completion.

The remaining exposure will "depend on the pace of the development," LaRue said.

He said "we believe" that the first buildings to be built will be on "three parcels that are terra firma." That apparently means B12 and B13 on the southeast block, plus B15 (664 Pacific) just east of the arena block. Also, B4 on the arena block is expected to start next year. (That has a below-ground base in a section of the former railyard, so it's another version of terra firm, as a deck is not needed.)

That puts off for the future development over the railyard, which requires a costly deck.

O'Brien said that for buildings that cost about $200 million there was about 50% equity, so at Forest City's going-forward share that's $5 million. I'd add that the condo building 550 Vanderbilt, unlike the rental buildings (like 535 Carlton and 38 Sixth) cost well more, but there's no new condo building planned as of now.

O'Brien said that the transaction with Greenland was not finalized, given some local government approvals and estoppels required, plus some approvals Greenland needs from the Chinese government. But the closure is targeted for mid-year.